One of the world’s largest tobacco companies, Philip Morris International (PMI), has filed a claim against Uruguay, challenging its recent tobacco restrictions. Uruguay wishes to restrict misleading marketing descriptors such as “light” and “mild”, as well as further branding techniques used to convey such descriptions. PMI complains that these measures are excessive and far-reaching. Company spokesperson, Morgan Rees said:

“It is without precedent anywhere in the world and arbitrarily limits each brand family to a single variant.  As a result, we had to withdraw from the market 7 of 12 brand variants we sold there. In the case of Marlboro, this means that we now only sell Marlboro Red in Uruguay and have had to withdraw Marlboro Gold, Blue and Green.”

PMI also challenges the pictorial health warnings on cigarette packaging that go “well beyond” their intended purpose, as well as a the recently requirement that 80% of a cigarette package be devoted to public health warnings. Mr. Rees says:

“The large size of these warnings prevents us from effectively displaying our trademarks and goes beyond what could reasonably be considered appropriate to inform consumers of the well-established health risks of smoking. Again, this is without precedent anywhere in the world.”

PMI seeks not just compensation for losses to its investments in Uruguay, but also suspension of Uruguay’s recent regulatory measures. PMI lodged the claim at the World Bank-affiliated International Centre for Settlement of Investment Disputes (ICSID), contending that the new legislation breaches the Switzerland-Uruguay bilateral investment treaty. This case will be closely watched by international lawyers and policymakers alike, as it will serve as an early test of the little-used intellectual property protections contained in Bilateral Investment Treaties (BITs). The case straddles the thorny border between protecting private investment and a government’s right to improve public health.

Uruguay is viewed within public health circles as having taken some of the most aggressive measures to curb tobacco use. Uruguay is to host the next Conference of the Parties of the WHO Framework Convention on Tobacco Control, an international treaty which encourages states to regulate tobacco products more stringently. The outcome of the dispute with PMI would send a clear signal to other countries who are contemplating more rigorous regulation.

Ultimately, the question at stake here is whether private companies should be allowed to make money from making other people ill. EG4Health is of the opinion that public health is more important than private enterprise, and PMI’s claim should be rejected.

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Abridged by Taavi Tillmann. Original article:

Shaffer E. Philip Morris files first-known investment treaty claim against tobacco regulations. IA Reporter. 3 March 2010.

Further links: http://www.truthout.org/philip-morris-vs-uruguay57389; http://www.prwatch.org/node/8928